Dilignet
Diligent: Navigating Complexities of Systems Integration with Cloud

Companies With Advanced Cybersecurity Performance Deliver Nearly Four Times’ Higher Shareholder Return Than Their Peers, According to Diligent and Bitsight

Wednesday, April 03, 2024

New research shows cybersecurity is an organization-wide issue, and stronger board oversight practices lead to better cybersecurity performance

NEW YORK --Companies with advanced cybersecurity performance create 372% higher shareholder return compared to their peers with basic cybersecurity performance, according to a new report from Diligent and Bitsight. The report also reveals that highly regulated industries, such as healthcare and financial services, have the highest cybersecurity ratings, and companies with either a specialized risk committee or audit committee achieve better cybersecurity performance compared to those with neither, with ratings of 710 and 650 respectively.

“These findings show that cybersecurity is not just an IT problem — it is an enterprise risk that has material impact on a company’s near-term performance and long-term health, and one that management and the board needs to be up to speed on,” said Dottie Schindlinger, Executive Director of the Diligent Institute. “With increased pressure from regulators for organizations to demonstrate how they oversee cybersecurity, now is the time for boards and leaders to build their competency around cyber risk.”

“Cybersecurity is no longer about simply mitigating risk, it's now a key indicator of financial performance. Companies must treat cybersecurity as a cornerstone of their business strategy, guided by clear, ambitious benchmarks, and backed by the full support of their boards," added Dr. Homaira Akbari, CEO of AKnowledge Partners, Board of Director member for Banco Santander and Landstar System and member of Bitsight’s Advisory Board.

In the “Cybersecurity, Audit and the Board” report, Diligent and Bitsight analyzed more than 4,000 mid to large-cap companies in public indices globally. Additional findings include:

Companies with measurably stronger cybersecurity performance deliver higher financial performance than their peers

• The average total shareholder return (TSR) for companies with advanced security performance ratings over a five-year and three-year period was 71% and 67%, respectively, while companies in the basic performance range delivered 37% and 14% TSR over the same time frames.

• Companies with a higher number of independent directors are more likely to have advanced security ratings. About 76% of directors on the boards of these companies with advanced security ratings are independent, compared to 66% in the basic security performance category.

Companies with specialized risk or audit committees have better cybersecurity performance

• The median cybersecurity rating for companies with specialized risk committees is 730, compared to 720 for companies with just audit committees, indicating there is not a significant difference in the ability of the audit committee to oversee cyber risk compared to a specialized risk committee.

• Having a cybersecurity expert on the general board is not enough – those experts need to be directly involved with cyber oversight. Companies with cybersecurity experts on either audit or specialized risk committees achieve an average security performance rating of 700, whereas companies with cybersecurity experts on the general board, but not on either committee attain a security rating of 580.

Highly regulated industries outperform other industries in cybersecurity performance

• The healthcare sector had the highest average security ratings overall at 730. Of the companies with advanced security performance ratings, 33% came from the financial services sector, with an average rating of 720.

• By comparison, 24% of companies with basic security performance ratings came from the industrials sector, and the sector with the lowest overall performance rating was the communications sector, at 630.

"The research shows that market leading companies that prioritize cyber risk management outperform their peers,” said Derek Vadala, Chief Risk Officer, Bitsight. “This cannot be achieved without a strong understanding of cybersecurity performance and clear benchmarks shared across the executive team and board. The role of the CISO has shifted. Cyber risk is a key component of business performance."

Learn more about how to get certified to oversee cyber risk here. For more information on how Diligent and Bitsight partner to give directors access to market-leading cyber risk data and insights, visit here.

View the full report here.

Methodology

Analyses consists of 4,149 mid to large-cap companies in public indices across Australia, Canada, France, Germany, Japan, the United Kingdom, and the United States. Diligent correlated each company’s cyber oversight structure with their corresponding security performance data, obtained from Bitsight. The correlation method involved averaging the ratings within each category to identify discernible patterns. Bitsight creates cybersecurity ratings based on externally observable measurements of an organization’s security posture. View a full report methodology here.

Diligent CEO Brian Stafford Celebrated as a Leader in Governance for the Third Straight Year

Monday, April 15, 2024

NACD Directorship magazine names Stafford among the most influential people in and around the boardroom

For the third year running, the National Association of Corporate Directors (NACD) has named Brian Stafford, CEO of Diligent Corporation, among the top 100 influential leaders in the boardroom and corporate governance community.

Diligent, the largest global network of corporate directors and executives, provides nearly 700,000 leaders across 19,000 organizations in more than 90 countries with highly secure, integrated SaaS technologies. With an eye towards inclusivity and accessibility, Diligent serves some of the largest public governing bodies, including more than 50% of the Fortune 1000, 70% of the FTSE 100, and 65% of the ASX.

The NACD Directorship 100 is composed of 50 public company directors and 50 governance professionals and institutions that exemplify knowledge, leadership, and excellence. Each year, NACD Directorship magazine recognizes these individuals for their significant role in shaping the greater boardroom agenda.

Since joining Diligent in 2015, Brian has transformed the company by balancing rapid growth-in terms of headcount, footprint, and new products. He took the company private in 2016 and doubled down on innovation to support customers, increasing investment in research and development by twofold.

Building on the launch of modern governance last year, Brian and the Diligent team recently introduced Modern Leadership, an initiative aimed at providing board directors and senior leaders with the resources, insights, partnerships, and technology they need to further catalyze diversity in their organizations. Intended to address historic issues around both pipeline and transparency, Modern Leadership established the largest and most diverse community of board-ready executives globally along with a directory of open board roles and searches intended for diverse director candidates.

'In a time when modern governance matters more than ever, I'm honored to be recognized by NACD as an innovator and leader in the governance community alongside so many highly respected directors and peers,' said Stafford. 'Together we are navigating unchartered waters, and at Diligent we are committed to providing our customers, directors and the governance community with the thought leadership, product innovation, and networking opportunities necessary to come out stronger on the other side.'